SAT AUG 17 2024-theGBJournal| Crude oil prices fell nearly 2% Friday with Brent crude futures settling a little at $79.68 a barrel. The U.S West Texas Intermediate also dropped by $1.51 TO $76.65.
The Organization of the Petroleum Exporting Countries (OPEC) on Monday cut its demand forecast for the year, citing slow down in China’s economy.
Meanwhile, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), latest data shows Nigeria’s crude oil production (including condensates) rising for the fourth consecutive month, up by 2.2% m/m to 1.53 mb/d in July (June: 1.50 mb/d).
This is attributed to the improvement in the period to higher production volume recorded across the Escravos (+9.5% m/m), Forcados (+9.3% m/m) and Bonny (+0.9% m/m) production terminals, while Erha (-13.3% m/m), Odudu (-4.1% m/m) and Egina (-1.2% m/m) terminals recorded declines.
Despite the improvement, we note that overall crude oil production remains below pre-covid levels (Q1-20 average: 2.14 mb/d) due to the lingering effects of insecurity, infrastructure decay as well as low investment in the sector exacerbated by the exit of international oil companies (IOCs) and unresolved issues regarding the approval of oil asset transfers.
Despite ongoing efforts to boost oil production—including government measures against theft and vandalism and the development of new fields—several factors are likely to constrain crude oil output in the near term.
These include frequent leaks from pipelines, intermittent oil terminal shutdowns for repairs, and International Oil Companies (IOC) divestments.
Thus, we maintain our average crude oil production estimate (including condensate) at 1.52 mb/d in 2024E (FGN budget: 1.78 mb/d).
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